As an independent, transparent marketplace for student loans, Credible helps borrowers understand all of their student loan options.
Finding the right private student loan for you will help you fund your college degree with the best terms and with the lowest interest rate possible. Many students turn to private loans after they have exhausted all of their federal options.
While private student loans come at a higher interest rate than federal loans, there are still several private loans available with good terms and competitive rates. Here’s how to find the best private student loans to achieve your college success.
Apply with a Credit-Worthy Cosigner
To increase your chances for a private student loan and get the best rate possible, cosign with an individual who has excellent credit and a steady income. Majority of students will need a cosigner even if they don’t have poor credit. This is because most college students have not established a credit history yet, or they do not have a steady income. Interest rates for private loans vary depending on credit-worthiness. Getting the best rate is important because even a 1% difference in interest rates can result in thousands of dollars in the lifetime of the loan.
For example, a 15-year loan with 6% interest will cost $28,541.83 in interest alone. However, if you received that same loan at 5%, the total interest payment for the life of the loan would be $23,288.57, saving you more than $5,000 in 15 years.
Keep in mind that cosigners do not have to be your parents. They can be anyone with good credit. Typically, cosigners can be released from a loan after several months of demonstrated on-time payments. Refinancing your loans is another way to drop your cosigner.
Shop the Best Rates
Do your research before settling on a private student loan. Use online tools to help you compare rates and then read reviews about the loan. Just because you received one rate from a private lender doesn’t mean you will get the same rate from the next. Universities usually have a list of private lenders that will disburse right into your school account to make this process easier, however that does not mean you can’t explore other lenders that can do similarly. Use a service like Credible to shop and compare your student loan options.
Look for Discounts
Students can get private loans from banks, credit unions or other lending institutions. Sometimes banks and credit unions offer an APR discount on their loans if you are a customer or member. Remember that if you do not get the rate that you like or with the lender you want right now, you can always refinance your loans after you graduate to change the terms and lender of your loans.
Pros of Private Student Loans
Private student loans are typically taken after you’ve exhausted your federal options, but private loans come with unique perks. Applying for private student loans is much quicker than filling out the FASFA and most loans often have no origination fees. You will also be able to use your loan for a much broader range of educational funds, rather than being limited to just paying for tuition, housing, and books. Depending on the lenders approval, you can typically borrow as much as you want for school expenses.
Finding the best private student loans will take some time, but putting in the research will pay off in the end. If you are too quick and desperate to get a private loan, you may settle for one with costly terms and an even costlier APR.
If you want to find the best private student loans, visit Credible to explore your options.